Regulators Frosty On Possible Wireless Consolidation

Regulators are not enthused about a possible Sprint and T-Mobile U.S. merger agreement, voicing concerns that further consolidation of the market could lead to reduced competition.

The New York Times reported earlier today that William Baer, assistant attorney general for the Department of Justice’s antitrust division, said it would be “hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers.” As the Times notes, Baer didn’t specifically detail which firms might be working to combine, but the subtext is clear.

Sprint shares fell yesterday on the news. Bloomberg reported that Sprint had received a “cool reception” from the Department of Justice.

The irony is that T-Mobile itself has been making waves, offering to pay the early termination fee of customers of rival carriers to tempt them to its service. Some are making the jump. That’s a competitive move. Uniting two American carriers at this point would reduce the total pool by a fourth, a sharp contraction.

Putting T-Mobile U.S. into a Sprint box could see it reduce its efforts to disrupt its market. And that could worry regulators about decreasing competition. Baer, the Times quotes, thinks that the American consumer has been the recipient of “much more favorable competitive conditions” since the government axed the 2011 AT&T/T-Mobile deal. Or, in other words, the folks dealing with this sort of thing have historical precedent to be conservative in their regulatory decisions. Recent precedent, even.

We’ll keep an eye on this over the next few months, but the government appears to be signaling that if Sprint and T-Mobile U.S. want to unite, the journey will be a full slog on a steep incline. If it’s possible at all. Top Image Credit: Flickr